The End of Quantitative Easing and What It Means for Commodities

NEW YORK (TheStreet) -- It's rather bizarre that we've heard so much from pundits and Republican policymakers about the horrors of quantitative easing, how we've needed to end the problem for too long, and now -- when we're less than three months from closing the program, nobody in Washington or on Wall Street is talking about it.

It's odd but true -- in the wake of such noise making, the debate has abruptly turned to interest rates

Certainly, interest rates are important. Still, how are we looking right past the end of quantitative easing without acknowledging that we're finally going to be done with printing money?

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Since 2008, we've basically had a printing press at the Federal Reserve. The most recent QE has pumped about $35 billion into the economy. There was supposed to be massive inflation due to this printing. The truth is, we had little to no inflation. In fact, it is quite likely that we will see a strengthening dollar. The dollar has been in a nice uptrend.

This leads us right into the end of a Fed buyback program that has basically printed $4 trillion without increasing inflation. Sure there are pockets of inflated prices such as crude, wheat, and even the price of tea in China, but it isn't true inflation. That's called anecdotal evidence.

What nobody is focusing on is the fact that it is very likely the U.S. dollar will start to gain ground on all other currencies. This will, in turn, hit all commodities. Every single commodity that is traded in U.S. dollars should slide in value. WTI crude could test $70-$80 per barrel based on our current supply numbers and the fact that geo-political unrest hasn't slowed global production in the slightest. Even Libyan oil is starting to come back to markets.

There is a chance that markets, overall, will be hit when this happens. Why? This is a bit unprecedented. We have never seen stimulus like this be taken off the table. You've heard the term "baked in?" There's very little evidence that the end of QE has been "baked in." Despite the headlines, we've been trading mostly sideways this year, but nobody knows how markets will react when the Kool-Aid is actually removed.

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